Back in the early 2010s, stocks were booming for 3D printing -- also known as additive manufacturing, a computer-controlled process in which three-dimensional objects are made. But the boom was followed by a bust as many pure-play 3D printing companies didn't immediately deliver on lofty expectations.
However, rumors of the manufacturing technology's demise were clearly premature. These days, 3D printing is a high-growth niche that is steadily reshaping the manufacturing sector. Some estimates point to a doubling in annual revenue from additive manufacturing between 2022 and 2026. Even growth investor Cathie Wood has launched a fund focused on manufacturing tech, The 3D Printing ETF (NYSEMKT:PRNT).
Here's what you need to know about 3D printing and additive manufacturing stocks for 2022.
Image source: Getty Images.
The manufacturing of products in all corners of the economy, from healthcare equipment to metal fabrication to the construction of housing, is being revolutionized by 3D printing. It's invading so many sectors that even tech software giants such as Microsoft (NASDAQ:MSFT), Autodesk (NASDAQ:ADSK), and HP (NYSE:HPQ) have launched products aimed at 3D printing and additive manufacturing.
Here are five key players to consider for 2022 that are a more focused bet on 3D printing.
Desktop Metal (NYSE:DM)
$1.2 billionRecent IPO that focuses on metal fabrication technology.
$1.4 billionOne of the original 3D printing pioneers with a wide array of printers and supporting design software.
$2.3 billionA manufacturing marketplace, including access to on-demand 3D printing services.
3D Systems (NYSE:DDD)
$2.4 billionAnother original 3D printing pioneer and the largest pure-play stock on 3D printing technology.
$13.8 billionA manufacturing technology provider with a suite of software and related services for industrial businesses.
Data source: YCharts. Market cap as of Jan. 19, 2022.
This company is a recent publicly traded entry into the 3D printing space after going public via a SPAC at the end of 2020. The stock has been a terrible market underperformer since then, though, losing three-quarters of its value as of the start of 2022. However, that doesn't mean this isn't a promising business for the long term.
As its name implies, Desktop Metal develops 3D printing hardware and accompanying software for metal and carbon fiber parts. The company's smaller systems can handle prototyping and one-off parts, and larger printers are production grade-designed for manufacturing facilities. Desktop Metal serves companies operating in automotive, consumer goods, and heavy industrial equipment businesses.
Despite a tenuous start as a public company, Desktop Metal was actually increasing revenue at a torrid triple-digit pace in 2021. Gross profit margins are thin, and the company generated a steep net loss, but that should improve over time as the business scales its operation. Along the way, Desktop Metal has several hundred million dollars in cash and investments to fund its expansion.
Stratasys was part of the early 2010s 3D printing stock boom and bust, but its business has endured. Sales took a dip early in the COVID-19 pandemic but are rebounding as the company picks up new manufacturing contracts.
Stratasys serves a diverse set of customers, including aerospace and automotive parts manufacturers, medical and dental companies, and makers of basic consumer products. In addition to a wide array of 3D printer models, Stratasys develops software to help users accelerate the time between design and final printing.
It isn't the highest-growth name here, but Stratosys is profitable (on a free cash flow basis) and has more than $500 million in cash and investments on its balance sheet, as well as no debt. Management thinks its payoff from years of research and development into additive manufacturing will accelerate in 2022.
This is another newcomer to public markets. Xometry completed its initial public offering (IPO) over the summer of 2021, raising almost $350 million in cash in the process. As is often the case with new IPOs, the stock has underperformed since then, and, at one point, lost half of its value from the time it started trading on public markets. But the business itself is growing rapidly.
Xometry is a marketplace for on-demand manufacturing of prototyping and mass production. It has a network of more than 5,000 suppliers that companies can call on to meet their fabrication needs. Among the suppliers on the Xometry platform are 3D printing companies, injection molding, and automated machining. The company reported having more than 26,000 active buyers utilizing its platform in the autumn of 2021.
Although it isn't profitable yet, Xometry's unique approach to the 3D printing and additive manufacturing industry is growing fast. Like other names on this list, it also has a sizable war chest of cash and short-term investments that it can spend on research and marketing as it tries to attract more suppliers and buyers to its marketplace.
3D Systems was another early player in the 3D printing industry, and while it suffered through the boom-and-bust period of the early 2010s, its business has held steady for much of the past decade. After a brief dip during the early days of the pandemic, 3D Systems is back in growth mode.
The company develops printers and design software for all sorts of materials and industries (medical device makers, dental labs, semiconductor designers, aerospace, and automotive manufacturers). It claims leadership among independent 3D printing companies (as measured by sales). As the 3D printing industry expands in the coming years, 3D Systems thinks it will be able to attract lots of new business with its extensive experience and global reach.
As an established tech outfit in the manufacturing sector, 3D Systems offers investors the prospect of more stable growth, along with profitability. It also has a large net cash position from which it can consolidate its lead in 3D printers and software technology.
By far the largest company on this list, PTC is a longtime technology partner of manufacturing and industrial enterprises. Fast approaching $2 billion in annualized sales and highly profitable, PTC has all the tools needed to digitally transform industrial businesses.
Besides 3D printing computer-aided design software -- ANSYS (NASDAQ:ANSS) is a peer that also plays in this space -- PTC specializes in augmented reality, industrial IoT (Internet of Things), and product life-cycle management software. Most of its revenue is subscription-based (including its Creo software that enables 3D printing), making for a stable and steadily growing business model that generates ample cash flow. PTC puts spare cash to work developing new products for its partners and makes the occasional bolt-on acquisition that enhances its overall offerings.
As a larger company, PTC won't be the fastest-growing stock in the additive manufacturing and 3D printing space. However, the company has established itself as a leader in industrial technology and should be a primary beneficiary as the production of manufactured goods gets more efficient.
Manufacturing technology is making inroads throughout the global economy by reducing the cost of production and localizing and speeding the time to delivery of customer orders. This is far from mere hype. Nevertheless, as is the case with all technology investments, progress won't go straight up. Expect twists and turns in these stocks as they develop new methods to design and make products.
If you decide to invest, do so in a measured way. Maintain a diversified portfolio, be wary of stocks benefiting from investor over-optimism, and always leave spare cash to invest more when there are inevitable dips. Given enough time -- years and decades -- investing in 3D printing could eventually provide a big payoff.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Nicholas Rossolillo owns Autodesk and PTC. The Motley Fool owns and recommends Autodesk and Microsoft. The Motley Fool recommends 3D Systems, ANSYS, and PTC. The Motley Fool has a disclosure policy.